Certified Management Accountant questions with correct answers

TC=(VCs xQs) + FCs Correct Answer-Master Budget uses standard quantity TC=(VCs x Qa) + FCs Correct Answer-Flexible Budget uses actual quantity ROA Correct Answer-ROA =Profit Margin x Asset Turnover Income/Assets = Income/Sales x Sales/Total Assets ROA numerator issues Correct Answer-There are two major issues for measurement of income in the numerator: (a) income taxes, and (b) GAAP. ROA Denominator issues Correct Answer-Denominator Issues It is in this figure that there are a wide variety of possibilities. The two issues are (a) which assets to use and (b) how to value the assets. Cash Flow Return on Investment (CFROI) Correct Answer-To avoid possible accrual accounting manipulation of performance measures and to increase focus on cash flows, managers may be evaluated using a cash flow return on investment (CFROI). CFROI, developed by Boston Consulting Group and Holt Value Associates, can be calculated by dividing operating inflation- adjusted cash flow by gross assets. Sometimes the denominator is calculated using the market value of equity; however, this measure is often unavailable for responsibility centers. Economic Value Added (EVA) Correct Answer-Many large companies in the United States have begun to use this performance measure. It is a type of residual income calculation that takes into account (1) the after-tax operating income, (2) a required rate of return equal to the w